Monday, October 15, 2012

Nobel Prize in Economics Awarded to Alvin E Roth and Lloyd Shapley

Developing....

UPDATE 1

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2012 was awarded jointly to Alvin E. Roth and Lloyd S. Shapley "for the theory of stable allocations and the practice of market design."

UPDATE 2


Alvin E. Roth
Born: 1951
Affiliation at the time of the award: Harvard University, Cambridge, MA, USA, Harvard Business School, Boston, MA, USA



Lloyd S. Shapley
Born: 1923, Cambridge, MA, USA
Affiliation at the time of the award: University of California, Los Angeles, CA, USA








UPDATE 3

Appears to be a worse choice than awarding Peace Prize to EU.

Roth does not appear to understand what economics is about and what it can and can not do. From an April 2011 piece by the Boston Globe:
 Roth has emerged as a rare figure in the academic world: a theorist willing to dive into real-world problems and fix them. After helping the med students, he designed a better way to assign children to public schools — the system now used by both Boston and New York. He also helped invent a system for matching kidney donors with patients, dramatically increasing the number of donations that take place each year. More recently, he and one of his students have been talking with Teach for America about improving the system it uses to deploy volunteers around the country. 
Academically speaking, Roth is a pioneer of so-called market design: finding situations where a market is failing — often, a place that most people wouldn’t even recognize as a market — and making it work better. Roth has influenced a cadre of young, energetic market designers, many of whom have taken up prominent positions at top universities. Inspired by Roth’s work, these rising economists are also setting their sights on real-world problems. Some are looking at dating websites; others are interested in how universities could do better at scheduling their students’ classes. Like Roth, all of them envision a world in which economists, as unlikely as it may seem, are recognized as society’s mechanics. 
Sitting in his office last week, Roth talked about how it was time for economics, as a field, to turn a corner — how merely describing markets as they naturally occur was no longer enough. Instead, he said, economists have to make themselves useful by fixing broken systems in which people aren’t getting what they want. 
“We’re starting to know enough about how some of these things work,” Roth said, “that in some cases, when you’ve got a market in trouble, and you think, ‘Who’re you gonna call?’ you could call an economist.”

He sounds like a wonk that would be pretty good at designing schedules for the NBA and Major League Baseball, but he is out of his league, if he thinks his schedule design shows market failure. The fact that he is improving schedule design shows the market improving things. He comments up with a better solution and the market jumps at it.

The view Roth hold's that he is somehow "society's mechanic" is absurd.  There is a major difference between designing schedules and designing society. Schedules have constants and fixed goals. Society has no numeric constants and there are no mathematical true universal societal goals.

Roth simply doesn't understand Hayek's very important book, The Counter-Revolution of Science and what it says about applying the methods of the physical sciences to economics and society.

UPDATE 4:

Bottom line: The Nobel committee seems to be attempting to advance central planning with this award, promoting the idea that these sophisticated schedulers could actually advance their talents to planning society. Very dangerous stuff.

As for their work beyond schedules, Roth and Shapley aren't doing anything close to "market design" in the sense the term markets is generally thought about and one wonders how "stable allocations" could occur that are different from market allocations. Central planning propaganda to the core.

UPDATE 5:

Here's Slate on some of the "important" work conducted by Shapley:
The economics Nobel-ish prize has been awarded to American game theorists Alvin Roth and Lloyd Shapley. The common thread in their work has to do with matching in markets where swapping and the use of money are constrained or forbidden. 
Shapley modeled this somewhat whimsically with a very stylized notion of a marriage market, and showed that the optimal outcome is one in which women use a strategy of "deferred acceptance." That is to say that instead of saying yes to the suitor she likes the best, the recipient of multiple proposals should reject the suitors she doesn't like the best and just pocket the best offer. Then the rejects make a secondary offer, so now women who pocketed a proposal in the first round can swap if they got a better match in the second round. The procedure repeats and you can show that the resulting arrangement meets certain formal criteria for stability...
Which is a perfect example of how game theorists like Roth and Shapley paint situations as though they have discovered something important, when in fact they simply put in a complex manner something that is pretty obvious. Namely, that a woman will choose the best possible spouse (in her view at a given time) but will not necessarily jump at the first offers that come her way--although she may later go back to the best of those original offers.

12 comments:

  1. Central planning is the future. Washington DC is now the richest city in the U.S.

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  2. This reminds me of what Italians sometimes say about Mussolini:

    "All things considered, at least the trains ran on time."

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  3. I define a "broken market" as one where "society's mechanics" are messing with it. :)

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  4. A first pass through their works tells me they are doing operations research, not economics. I guess the Nobel committee has become bored with econ because it doesn't promote socialism.

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  5. "The Nobel committee seems to be attempting to advance central planning with this award"

    With the exception of Hayek, when have they not?

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  6. >Like Roth, all of them envision a world in which economists, as unlikely as it may seem, are recognized as society’s mechanics.
    >Bottom line: The Nobel committee seems to be attempting to advance central planning with this award

    One need look no further than the Bernanke Federal Reserve, arguably the most acitivist Fed in history.

    This IS the era of the meddling Centralized State. Is this the best the world advances to? Let us hope not, and this era passes into the night.

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  7. Ah yes.

    They've improved the reliability of the floating-witch test.

    They've discovered a way for balsa-wood bats to send baseballs past the pitcher's mound.

    They've enabled our Dear Overlords to control us more efficiently.

    Give them the prize already!

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  8. They look like a couple of dust bunnies, and were supposed to think and read on what their quackery means? I'll stick to physical gold and silver, not b.s.

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  9. Until you save the number of lives that Roth has with his work in kidney exchange, maybe you should put a pause on labeling him some kind of awful dictator. If you read even his blog, you'd see how much he has to say about the role of repugnance in denying things like organ markets. It's stuff that even the most ignorant libertarian in this comment section would find interesting.

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    Replies
    1. Just make organ donation on death opt out and let people sell organs. There would be almost zero people dying in need of a transplant. Doesn't take a genius to solve the problem overnight.

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    2. Unfortunately these guys cannot see that every gov law is a price fix. They try to work within the framework (without realizing that the myriad bad laws that corrupt the system make rational action impossible) when simply allowing REAL markets to work would solve 99% of the problem.

      If anyone could sell a kidney, or 1/4 of a liver, or opt to sell all their organs (at a price) in case of death, the "problem" of organ shortages would disappear overnight. If the cost of a kidney dropped to $1,000 then no one would desire to sell a kidney, while many would opt to add it as an "early accidental death" clause to their insurance policy.

      In many ways this Nobel is even worse than the execrable EU Peace(sic)Prize. The Nobel committee has fucked up the rep so bad that it is on par with the IgNobel prize- I would rather win the latter over the former!

      Dale Fitz

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  10. Or, you know, you could take an average college libertarian and you could have him tell you to free the market and the kidneys will take care of themselves.

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